Right player, right time, right brand, right sport - Rory ticks all right boxes

Nike have been looking for Tiger Woods’ heir apparent, someone who can carry the brand into the future, writes
MALACHY CLERKIN

It feels so quaint to look back on it now. The date was September 18th, 2007, and Rory McIlroy had just announced that he was turning pro.

Breaching the chrysalis of the amateur game was always going to come with sweeteners attached and so one of the first tasks at hand for Chubby Chandler that day was to announce his sponsors. Jumeirah Hotels, Bennett Construction, Lough Erne and Titleist were the initial money men, the latter pulling the golden ticket as McIlroy’s chief supplier of stick and ball. Everything was accounted for right down to the soles of his feet, which would be housed, cushioned and bespiked by Footjoy.

Actually, not quite everything. It seems mad to think of it now but there was in fact one stone left unturned that day. Intentionally or not, ISM hadn’t yet signed McIlroy up to a clothing contract. It didn’t matter a whit, of course – the weight of the other deals came in at a nice round £1 million before he’d so much as teed up a ProV1 in professional anger.

It did, though, give rise to a line in the press release that looks impossibly sweet now, given the colour of the paper he’s about to ink. Clothing – Rory will wear his own for the present time.

Five years, three months, 27 days and somewhere in the region of $43 million in on- and off-course earnings later, Rory is long past wearing his own clothes. On Monday in the Fairmont Bab Al Bahr Hotel in Abu Dhabi, he will officially take his place on the Nike payroll. From here on out, he will be a walking swoosh, never knowingly to step in front of a camera without the world’s most famous fattened tick somewhere in the shot.

Bonuses for winning

The nuts and bolts of exactly what it’s worth won’t ever see the light of day, but the main body has been widely leaked and by now there can be few golf followers who haven’t heard that the deal will be worth $200 million over 10 years. On top of that will come bonuses for winning Majors, for staying world number one (or regaining the spot if he loses it), for topping money lists on either side of the Atlantic.

It will be the biggest contract Nike have with any golfer, worth double their deal with Tiger Woods. By teatime on Monday, McIlroy will skip dozens of places up the list of the world’s highest-earning sportspeople.

How high? Well, put it this way. Seven months ago, Forbes magazine pegged him at number 91 in the world. They were measuring money earned in the 12 months between June 2011 and June 2012, so between prize-money, appearance fees and endorsements, they estimated McIlroy to have earned $17.4 million. Without striking a ball, this Nike deal will be worth $20 million a year, so already he moves up to somewhere in the mid-60s on the next list through sponsorship alone.

Consider then that in the six months since that list came out, McIlroy has won the USPGA Championship, two Fed-Ex Cup tournaments and the DP World Tour Championship, totting up on-course earnings of just a shade over $6 million. Throw in another $1.5 million in appearance fees in China at the end of last year and already, before he’s stuck a tee in the ground in 2013, he has earned close to an amount that would have put him in the top 25.

It’s a reasonable expectation that he will win a couple or three tournaments between now and June, lifting him right up to the verge of the top 10. He turns 24 in May.

His youth is not insignificant here. He was the second youngest person on that Forbes list, two months older than a linebacker for the Oakland Raiders called Rolando McCain. The closest to him in age at the top of the scale is 25-year-old Leo Messi, an Adidas man who takes in $19 million a year in sponsorship on top of a $20 million-a-year salary from Barcelona.

Signing up

Nike are signing up for McIlroy’s mid-to-late 20s, the time in his life when he can appeal to the broadest churches, the greatest cross-section of generations. A pitchman whose curls will still bounce well into the 2020s.

The numbers are eye-watering and yet Nike clearly believe it’s because he’s worth it. In the four years since Tiger won his 14th Major, 13 golfers have stepped into the breach to win their first. Just about every one of them had a shot at taking the next step and becoming the poster boy for the post-Woods generation – with the best will in the world, even Darren Clarke himself wouldn’t have harboured that type of ambition – yet only McIlroy has gone ahead and won a second one. In winning both of them by eight shots he didn’t just separate himself from the field in those particular weeks, he did so for good in the public consciousness. His easy just seems so much easier than everyone else’s.

Hefty commitment

Nike’s golf division brought in $726 million in 2012, up 11 per cent on the previous year. Still, $20 million a year for 10 years is more than just a cosy-up deal with a flavour of the month. It’s a hefty commitment – on both sides – to an intertwined future. Prof Simon Chadwick is the founder and director of the Centre for the International Business of Sport at the University of Coventry. A specialist in sports marketing and sponsorship, he sees the deal as a fairly logical step for Nike, even if it has come at a tasty premium.

“Nike are in a difficult position,” he says, “because their number one golf property historically has fallen on hard times, relatively speaking. When Tiger Woods crashed his car into a fire hydrant in 2009, Phil Knight of Nike described it as a minor blip. Commercially that’s quite interesting because I think they genuinely believed that there was still some sustainability and financial value in the Woods brand heading into the future. But that just hasn’t transpired. Tiger hasn’t won a Major since then and his public reputation hasn’t recovered to where it was.

“That’s a problem for Nike because what you’ve got to keep in mind is that Nike essentially built their whole golf business on the back of Woods and for a long time the vast majority of their commercial activity and their marketing was based around him. And it was very successful. They didn’t used to have a significant golf business but now they do. The problem is that to a large extent, they’ve been left high and dry. They now have a global golf business without a credible brand spokesperson.

Carry the brand

“So essentially what they’ve been looking for is an heir apparent, somebody with the same competitive characteristics as Woods but without the baggage, as well as somebody who can conceivably carry the brand into the future. That’s why I think the length of the deal is absolutely crucial.

“It seems to me that what they’re attempting to do is to build a sustainable business on the back of McIlroy over the next 10 years, just as they did with Woods over the first 13 years of their time together.”

The Woods angle is interesting, not least because the former world number one is such a competitive animal. Up until the revelations about his nocturnal how-do-you-dos came out in late 2009, his Nike deal was worth $20 million a year.

When the likes of Gillette, Gatorade, Accenture and ATT dropped him, Nike stood by their man. They did, however, make sure they got a little more value out of him, halving his deal to $10 million a year. Quite what he thinks of McIlroy coming in and sweeping up the sort of deal that simply didn’t exist at Nike for a golfer pre-Woods would be interesting to know.

Especially since it’s not a given just yet that McIlroy is the bigger draw of the pair. Granted, Nike can’t really be expected to sit around waiting on Woods to get back on course in his quest to pass Jack Nicklaus’s record of 18 Majors – especially since they’re much harder to win now than in the years when he was routinely gathering in a couple without breaking a sweat. Nonetheless, there is research in the US that says that last year Woods delivered a bigger bang for Nike’s buck than McIlroy did for his various alliances.

Media value

The sports market research firm Repucom estimates that in 2012, Woods generated $18.9m in media value in the US for his sponsors. They calculate that figure based on the amount of TV time he got in a season during which he won three times on the PGA Tour. Yet even with the sort of stellar season McIlroy had last year, Repucom put the figure generated by him at only $12.9m. The best explanation for the disparity is that McIlroy’s best form came late in the season, his two Fed-Ex Cup wins taking place in September just as the NFL season was kicking into life. Americans don’t watch golf in September, never have and never will.

That said, Nike obviously aren’t just signing McIlroy up to appeal to Americans. The US may well be the biggest sports market in the world but the area of greatest growth in golf over the coming decade will be in Asia. Right from the beginning of his career, even in his ISM days, McIlroy played far more golf in the Far East than most of his contemporaries.

As far back as September 2009, Chandler brought him to South Korea to play in a nothing tournament where he, Ryo Ishikawa and Danny Lee were the main attractions. The appearance fee comfortably outstripped the prize-money on offer but there was no doubting that even then, the main reason for the trip was to build his profile in Asia. The power brokers in golf have been saying for so long now that the next explosion in golf will be in the east that one day we’re all going to wake up and it will be true. Nike are ready and waiting.

“The interest in golf in places like China is really important,” says Chadwick. “There is obviously a very significant latent market for golf over there right now. I think in terms of commercial potential over the next five or 10 years, China alone probably justifies Nike spending such an amount of money on McIlroy.

Status symbol

“I’ve spent a reasonable amount of time in China and what’s clear to me is that golf in China right now is where golf in Europe was maybe 30 to 40 years ago. It’s very elitist, it’s very aspirational and for a lot of people it’s very much a status symbol. It’s what you do when you get a good job with a good salary – you get yourself a nice car and you buy a set of golf clubs. So they’re just at the very early phase and they’re discovering the game and it can only grow from there.

“The other interesting thing about it is that at a state level, the Chinese government are very taken with this western idea of golf being the game of business people. They like this idea that the golf course is where you do business deals, they see it as having a sort of elevated status that way. So it is a pretty serious business, not just at a private level but at government level as well. That can only mean more money and greater revenues for a company like Nike.”

No pressure then, Rory boy. Not that it’s likely to weigh on him too heavily. He’ll turn up to the Bab Al Bahr on Monday and make nice for a room stuffed with press. Some haircut in a sharp suit from Nike will gush about the future and they’ll play whatever new ad they’ve shot to wow the world. And sitting at the top table will be the hottest young sportsman in the world, a marketer’s jigsaw snapped perfectly into place. The right player at the right time for the right brand in the right sport.

Good for him. And who knows? Maybe they’ll even let him design his own clothes.

Tools of the trade What's in the bag

When Rory McIlroy won the DP World Tour Championship in Dubai last November, he was a Titleist man right through the bag.

He will obviously switch to Nike equipment now but it will be interesting to see what he decides when it comes to his putter. He has been practising in the Els Club in Dubai this week with both the Nike Method and his old Scotty Cameron blade in his bag.

Famously, Tiger Woods stayed true to his Scotty Cameron putter well into his Nike years, winning 13 of his 14 majors with it. Even when he changed to the Nike Method putter in 2008, it took him a few seasons to commit to it fully, switching over and back, depending on his level of confidence for a few seasons. Whether McIlroy will switch immediately or – more likely – take a while to try to get used to a new one will be one of the questions he’ll be answering on Monday. As for the rest of his bag, it will look like this:

Since you ask, his clubs will be monogrammed – each of them inscribed with the legend ‘RORS’.

High rollers Massive sponsorship deals in sport

1 Michael Jordan (Nike, ongoing)

(Over $40 million a year)

The Mac Daddy of them all. His first contract with Nike was $2.5m over five years way back in 1984. These days, his Air Jordan brand is dominant in the US, taking in over $1 billion in revenue last year for the first time. Nike Jordan owns 10.8 per cent of the American sports shoe market and three out of every four basketball shoes sold there are Jordans.

2 Tiger Woods (Nike, 2000)

($100millon over five years)

The gold standard when it comes to endorsement contracts and the template for what McIlroy will be signing up to on Monday. At the time he signed it, Woods was not only the world’s best golfer, he was the most dominant athlete in any sport. No active sportsman has made more money from endorsements in his career than Woods.

3 David Beckham (Adidas, 2003)

($160 million lifetime)

Beckham has run Woods reasonably close, however. All the more so after scandal derailed Tiger’s earning potential in 2009. This deal with Adidas was seen as gargantuan at the time Beckham signed it and was very obviously a move to stop Nike poaching him.

4 LeBron James (Nike, 2003)

($90 million over seven years)

Astonishing not only for the size of it but also for the fact James had yet to lace up a professional shoe when he signed it. The Chosen One, as Sports Illustrated had named him, was going straight from high school to the NBA and would be joining the unfashionable Cleveland Cavaliers. Yet Nike didn’t see it as a risk. Turned out it wasn’t.

5 George Foreman (Salton Inc, 1999)

($137.5 million over five years)

Remember the George Foreman Lean Mean Grilling Machine? George Foreman does. In 1999, he sold his name to manufacturers Salton Inc for stock worth $23.5m and five annual payments of $22.75m. His second life as a grill vendor has made him comfortably more money than his boxing career did.

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